Ernst & Young: Builders cautiously optimistic

By Rob Starr, Content Manager, Big4.com

A new Ernst & Young survey, based on responses received through 15 April 2012, paints a picture of an industry especially hard hit by the economic downturn but which has now achieved stability and is preparing for expansion.

Ernst & Young LLP US Homebuilding Co-Leader Steve Friedman highlights the tone of the findings:

“The homebuilding sector was rocked by the downturn, but in the last two years of polling key executives, we’ve witnessed a return to equilibrium. The general consensus of the industry seems to be that while there are still challenges to face, the stage is set for expansion to resume sometime in the next 24 months,” he says.

The biggest impediments to sales growth this year perceived by homebuilders are consumer confidence and the ability of potential buyers to sell their current homes. Consumer confidence has always been a big factor for homebuilders in anticipating sales growth, according to the survey. However, in this year’s survey, concerns over interest rates presenting an impediment seem to have diminished.

When asked about their own companies, most respondents also indicated that the turnaround was well established. Most reported that the overwhelming majority of their long-term debt does not come due until after 2014, indicating, perhaps, that many have been able to refinance into what they expect to be a revival in the housing sales market.

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